Black and Buono Blog

You can't expect to reach your financial goals without developing a plan for spending and saving.

Indeed, budgets play a pivotal role in helping consumers pay off debt, feather their nest egg and make the most of their hard-earned dollars.

However, many Americans lack the money management skills necessary to get their bank accounts under control. Often, it's because they don't know where they stand.

People write out budgets all the time without knowing where their money is really going. What they've created is a wish list of how they'd like to spend their money, but it's not realistic.

7 steps for a successful budget:

1. Track spending for a month. Track your expenses for at least a month, using a checkbook ledger, a sticky note inside your wallet or a daily expense work sheet. Be sure to record every purchase no matter how small, including ATM fees.

3.Prioritize spending. 35% of your earnings should be earmarked for housing and utilities.

4. Use cash for daily spending. The growing popularity of credit and debit cards makes it all too easy to overspend. Consumers should implement a strict policy of paying with cash for groceries, clothes, vacations and nonessential items.

5. Tackle credit card debt. Implement a plan to pay down your debt. Interest payments made to credit cards cost you and don’t allow you to allocate that money to savings or entertainment. The secret to paying off debt is to determine how much you can afford to send each month and make those payments consistently.

6. Build emergency savings account. Begin saving for a rainy day. Financial planners recommend setting aside three- to six-months' worth of living expenses into an emergency fund, in case you or your spouse lose a job, fall ill or get hit with an unexpected bill.